Is the customer king in your tax department?

• Author: Stoeppelwerth, Ronald P.
• Position: Includes related article - Corporate Taxes

Turn your tax department into a top-notch performer by dismantling the vertical bottlenecks and transforming all your employees into customer-service experts.

Suppose you're taking a quiz on your company's tax department. The first question is, "Who are your customers?" Which of these is the correct answer?

* The CFO.

* The state tax jurisdictions.

* The board of directors.

* The boss.

* The Internal Revenue Service.

* The shareholders.

* Nobody.

All of these are wrong. You need to go back to the drawing board and start with the fundamental concept that a customer is someone who consumes a service or product and pays for it. In a centralized corporate tax environment, the business divisions are the customers, because they pay the bills by some form of allocation or direct billing. The divisions have purchased this service from the corporate tax organization instead of buying it from an outside firm.

But many tax departments treat this obvious relationship as though it didn't exist. In fact, the relationship between the business divisions and some tax services organizations is downright hostile. This is partly because the typical Fortune 500 corporate tax department functions under a cloak of mystery. Senior management doesn't fully understand what happens in the department or why. And since the tax organization's only visible products are tax-planning initiatives, it merely compounds the confusion.

As a result, many tax departments have escaped the watchful eye of management that has sought to add shareholder value in other departments through re-engineering, team building and customer service. Yet the senior tax officer must apply those concepts in managing the tax department, if it's to achieve its mission of complying with federal and state tax laws, creating shareholder value through proactive tax planning and providing superior service to customers, all at the lowest cost possible.

Just how do you achieve this mission? Start by changing the name "tax department" to "tax services" to emphasize the importance of customer service in your department. You'll also need to create and implement a well-organized plan to change the department's mind-set. Rest assured that change won't happen overnight. It can happen only if you keep the organization attuned to its customers through departmental cooperation, management guidance or other forms of implementing and managing change.

TOPPLING THE STOVEPIPE

The "stovepipe" trap is perhaps the greatest impediment to achieving your mission. The stovepipe is a vertical organizational structure that's all too common in many corporations. To understand why it causes problems, look at what a typical tax organization does:

* Prepares the federal tax return, including the international aspects, and the state returns.

* Calculates federal financial statement tax provisions.

* Works on federal and state tax planning.

* Handles IRS and state income-tax audits.

* Prepares sales, personal property, payroll tax and use returns.

It's only natural to conclude that you should assign specific people to specific functions to accomplish these tasks, creating highly trained specialists who are experts in a particular taxation area. However, this structure, which discourages cross-training of functions, creates many problems.

First, it's not customer-focused. People in a stovepipe environment see themselves as payroll-tax experts or state-income-tax experts instead of business experts serving customers. Second, it's an inefficient, costly structure. While the federal tax-return accountants are working 60 hours a week, the accountants who handle IRS exams might be going home early because their workload doesn't require any overtime. Two months later, the opposite may be true. This isn't the most efficient use of the department's time.

Also, employees in such a...